Positive rating to attract investment – Economists

ALVIN CHIINGA, Lusaka
THE Economics Association of Zambia (EAZ) says Zambia’s sovereign rating from negative to positive by Standards and Poors (S&P) Global will attract more investment into the country.

EAZ president Chrispin Mphuka said in an interview yesterday that the development sends a good signal to investors, who will direct their investments to Zambia because the positive rating is an indicator of an economy posting a good outlook.

“It’s a good signal to the economy as it also helps in making borrowing cheaper for the country,” he said.
Dr Mphuka said if more rating agencies can also do like what S&P Global has done, the country can be assured of a more conducive investment climate in future.
On Sunday, Minister of Finance Felix Mutati described Zambia’s upgrade by S&P Global as an endorsement of the soundness of policies being implemented by Government to stabilise and grow the economy.
He said the development rides on the basis of critical reforms which Government has embarked on under the Economic Stabilisation and Growth Programme.
“The result from the assessment conducted by S&P Global is a welcome incentive for investors as they should remain assured that this country is on track with economic stabilisation and growth,” Mr Mutati said.
In its rating, S&P Global has said Zambia’s economic growth prospects are improving as a result of which it has revised the country’s outlook from negative to stable and has affirmed the ratings at ‘B/B’.
The agency has, however, cautioned that the rating could be lowered if Government materially deviates from its fiscal consolidation target.
It has further stated that it could lower the rating if previously destabilising factors such as the fall in copper prices and poor rainfall re-emerge.
S&P Global also expects Zambia’s agreement with the International Monetary Fund to be in place by the end of this year which will act as a policy anchor.